Market Rumours

Andrew Wilkinson, senior market analyst at Interactive Brokers, says he understands the argument that the stock markets may well have priced in too much too soon, but the present correction currently looks no worse than precisely that ? just another correction. "Today?s durable goods orders for September continue to show that the economy continues to push forward and that recovery is indeed on track. The dollar?s demise is likely to resume with the onset of a fresh calendar month next week," he adds
There is a risk that USD/JPY will move higher into the end of the week, says RBC Capital Markets. The bank points to Y1.8 trillion of Toshin (foreign currency bonds aimed at Japanese investors) scheduled as the end of the month draws near. "The selloff in JPY crosses risks extension to a broader USD rally as we head into month end, where the bias is skewed toward USD demand," the bank says.

EUR as well as other high-yielding units such as AUD, NZD falling vs JPY, and dealers in Tokyo expect they will continue lower for now as risk aversion storming FX market again. "The euro will likely keep falling for now because share markets are bearish and unstable again, which turned currency dealers back to a risk-aversion mood," says Mizuho Corporate Bank's senior dealer Yuichiro Harada. Dealers tip EUR/JPY may fall to 134.50 vs last 135.06 (it fell below 135.00 for 1st time since Oct. 20 earlier), NZD/JPY may fall to 67.00 vs last 67.35. AUD/JPY may fall to 82.00 vs last 82.92.

The Euro retreated from 1.5064 year to date high to 1.4845 and its recovery attempt has been capped at 1.4925, suggesting that the Euro has lost its bullish momentum and, according to Nicole Elliott, senior technical analyst at Mizuho Corporate Bank, the pair could consolidate below this year's high.Yesterday's "bearish engulfing" candle suggests consolidation below 1.5060 for this week, says Elliott: "Yesterday’s large ‘bearish engulfing’ candle suggest we shall correct and consolidate below this year’s high at 1.5064 this week and probably next."On the downside, Elliott expects 1.4770 to hold Euro bearish attempts: "Dropping below the 9-day moving average and hopefully finding support at the 26-day one at 1.4770 and short term 50% Fibonacci support."

EUR/JPY hits 1-week low of 135.27 on selling by Japan exporters for month-end settlement, with knock-on effects for USD/JPY (last at 91.45), says dealer at major Tokyo bank; adds USD/JPY, EUR/JPY "likely to keep facing downward pressure into the weekend, because there are still massive sell orders placed by Japanese exporters." Tips EUR/JPY support at 135.00 vs last 135.40, USD/JPY support at 91.00. Meanwhile, Deutsche Bank's Koji Fukaya says EUR/JPY may decline to 134.00 in coming days

For USD/JPY "it maybe good to consider short dated ideas, targeting around 93.00," says Sue Trinh, Senior Currency Strategist at RBC Capital Markets. Notes rationale for topside trade is expected month-end USD buying for hedge rebalancing, also notes over Y1.8 trillion of Toshin funds to be launched across Thursday, Friday; "it won't be taken up in full, but bias is toward JPY outflows as these funds will attract investment flows. If we use the average take up rate of about 5%, then that still equates to about Y92 billion to go." Adds short USD model stops around the corner, could exacerbate extent of USD short squeeze. Pair last 91.37.

USD/JPY may decline on lower U.S. Treasury yields overnight after stellar U.S. 2-year auction, says Nomura Securities senior trader Hiroshi Maeba; "I expect there will be a correction after recent sharp gain in (USD/JPY)," which was helped by gains in Treasury yield; "the overall trend of dollar-selling remains unchanged." Tips USD/JPY in 91.30-92.10 range vs last 91.78; EUR/USD in 1.4780-1.4860 band vs 1.4808. Meanwhile, EUR/JPY may face downward pressure as profit-taking demand remains strong from hedge funds, short-term players after EUR/JPY hit 1-month high Monday. Says EUR/JPY may trade in 135.20-136.30 vs 135.91